The recession risk suddenly emerged with a monetary policy failure and re-accelerating inflation. Currently, the three largest macro issues are driving the commodity markets. Surprisingly, April is building up to be an extraordinarily profitable month. Let’s get deeper into the analysis and see what is up.
This week is all about macroeconomics. Some of the most highly anticipated data releases include FOMC, US Inflation, and Non-Farm Payrolls Statistics. Other organizations, such as OPEC and IEA Oil Market Reports, will attract attention.
The important oil market reports will further clarify the supply situation that OPEC, IEA, and US EIA released this week. More inventory drawdowns are anticipated to indicate higher prices. In fact, several top Wall Street firms have already updated their projections in the previous week with bullish calls, indicating that the production cuts will cause oil prices to rise once again to at least $100 per barrel.
Expected recession due to the US inflation
Minutes from the Fed’s March Monetary Policy Meeting, US Inflation, and Non-Farm Payrolls Statistics could offer hints on the precious metal markets’ next major move, as economists anticipate a deep recession is on the way.
The all-time highs set in August 2020 were within reach for gold prices last week, while silver prices surged past $25 per ounce.
From the $1,800 mark at the beginning of March to above $2,000 an ounce last week, gold has been on an inexorable rise, posting an amazing gain of over 12% in the previous month alone.
Gold prices have increased for the second consecutive quarter, up more than 28% from the lows of $1,600 an ounce in November. This is the highest back-to-back quarterly gain in the gold price history.
2023 is hardly halfway over, yet commodities have already had a huge year. Although the markets’ biggest year since 2008 may only just be getting started.
Whichever perspective you take, one thing is undeniable. A “perfect storm” is currently brewing for commodities due to the macroeconomic environment, and there are no immediate indicators that it will decrease.